Housing crisis: Financial Times swipes at Government for using Reserve Bank as ‘convenient scapegoat’

The Financial Times has taken a swipe at the Government for using the Reserve Bank as a “convenient scapegoat” to fix the housing crisis rather than dealing with supply.

The British newspaper’s editorial board was responding to the Government last month instructing the Reserve Bank to consider the impact on house prices when making monetary and financial decisions.

The editorial board questioned the decision, saying: “Engineering deflation in consumer prices to address the particular, idiosyncratic, problems of the housing market would be a serious mistake.”

In other words, the board doubts the housing crisis can be solved by the Reserve Bank tinkering with interest rates and requiring would-be homeowners to have bigger deposits. It says the real issue is housing supply.